As the world speed up for new ETFs that capture short exposure on Bitcoin futures, as well as involving a degree of leverage, one has to feel excited that new products are being developed to take advantage of moves in Crypto. The Cryptocurrency evolution continues in earnest.
ETFs are fantastic products and they will play an ever-important role in the Crypto ecosystem. However, we should remember that they're still beholden to the NYSE trading hours and for active traders this can limit the opportunity. CFDs facilitate both long and short exposures, meaning that traders have the flexibility to move in and out of positions and capture any directional trends; higher or lower.
The trader can even trade the outperformance of one Cryptocurrency against another – a ‘pairs’ or ‘arbitrage’ trade – by going long the coin they think will outperform and shorting the potential underperformer, with the idea of netting off the performance.
The ability to go short with ease and potentially profit from a quick drawdown could be appealing – not just for HOLDers who may look for a hedge for their underlying position in a time of uncertainty, but more so for active traders, who perhaps are just keen to trade price action, trends, and the general flow of capital.
Whilst the hold times on short positions are rarely longer than a day or two, Pepperstone pay 7.5p on short swaps – naturally the capital move should always be the primary consideration but being paid if the position is held past rollover can be a sweetener.
As we‘ve seen through this week, there have been a number of instances when Bitcoin has cratered in minutes and one questions if this something that will increase in frequency？ Bitcoin traders have to consider, especially with price oscillating around $60k, that rapid moves should be the core consideration in one’s risk management strategy.
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